Staples - Johnstown 590 Galleria Dr, Johnstown PA 15904 Phone Number: (814) 262-9096
The distribution of manufacturing overhead costs to individual product unit, or production batches generally, requires a base or a cost driver, to which reference a rate, known as material burden rate applies. Material burden is the amount of manufacturing overhead costs that a unit of the base carries.
Direct Materials Inventory is debited for the standard cost of $9,000 (3,000 yards at $3 per yard), Accounts Payable is credited for the actual amount owed, and the difference of $240 is credited to Direct Materials Price Variance.anufacturers, of course, still have to pay the actual costs. As a result there are almost always differences between the actual costs and the standard costs, and those differences are known as variances. Standard costing and the related variances is a valuable management tool.